Arini’s Lemssouguer on Dislocated European Credit: Credit Crunch
Jan 27, 2025
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Hamza Lemssouguer, Founder and CIO of Arini Capital Management, shares his insights on the evolving European credit market. He discusses how low-interest-rate debt is maturing and traditional financing is retreating, creating opportunities in high yield credit. Lemssouguer elaborates on the balance between long and short investment strategies and the intricacies of managing risks. He also highlights his strategies in Collateralized Loan Obligations and the importance of thorough credit selection amidst changing market dynamics. Plus, a peek into his childhood passion for bird conservation adds a personal touch.
Hamza Lemssouguer's journey from Morocco to founding Arini Capital Management illustrates the significant role of education and mentorship in career development.
The transition from Credit Suisse to an independent fund was challenging for Lemssouguer, highlighting the importance of a strong operational team to support investment strategies.
Arini Capital focuses on capitalizing on credit market inefficiencies, particularly by assessing distressed securities amid the pressures of rising refinancing costs.
Deep dives
Hamza Lemziger's Journey in Finance
Hamza Lemziger shares his unique journey from Morocco to becoming the founder and CIO of Arini Capital Management. Growing up in a family that prioritized education, he developed a passion for mathematics, which he pursued through multiple master's degrees and an actuary degree in France. This academic foundation led him to a career in finance, starting at Credit Suisse in the leveraged finance department, where he gained experience in high-yield debt, bonds, and credit derivatives. The culmination of his experiences, along with encouragement from colleagues and family, motivated him to establish his own credit-focused investment firm.
Building a Successful Investment Firm
Transitioning from a structured environment at Credit Suisse to launching Arini Capital presented many challenges for Lemziger. He initially received encouragement from Credit Suisse management, who supported his idea of launching his own fund with substantial backing, but unforeseen turbulence at the bank caused him to pivot to a fully independent setup. The hardest part of this transition was establishing efficient infrastructure while ensuring a seamless integration of investment strategies and operations. To tackle this, he emphasized the importance of selecting a talented non-investment team to handle the business operations, allowing the investment team to focus solely on generating returns.
Investment Strategies and Team Dynamics
Lemziger highlights the importance of a cohesive team dynamic, as the initial team from Credit Suisse that he brought to Arini already had established trust and understanding among its members. This continuity enabled them to pursue investment ideas efficiently without needing to build rapport from scratch. He stressed that every investment strategy is fundamentally driven, meaning that each idea is assessed on its own merits rather than as a pair. By fostering a collaborative environment and maintaining clarity on investment strategies, Arini aims for effective performance in both long and short positions.
Credit Market Opportunities in Europe
The podcast discusses how the evolving leverage finance landscape in Europe presents a unique set of opportunities, especially given the tightening of interest rates. The market has significantly expanded over the past two decades, leading to an influx of corporate debt amid low rates, which is now facing pressure as refinancing costs rise. Lemziger indicates that a sizeable volume of debt will mature in the coming years, creating potential catalysts for strategic investments. By focusing on identifying shifts within the credit spectrum from performing to distressed securities, Arini seeks to capitalize on market mispricings and recovery scenarios.
Integrating Macro Considerations into Investment Strategy
Lemziger emphasizes that while macroeconomic factors are considered, the primary focus remains on individual credit fundamentals when making investment decisions. He acknowledges the necessity of stress testing investments against potential macroeconomic pressures but does not engage in macro trading strategies. Instead, the firm carefully examines how external factors like rising costs, economic shifts, or geopolitical developments could impact their investments. This disciplined approach allows them to navigate complexities in the market while still being rigidly focused on the quality and potential of each investment.
European credit markets have gone through a significant shift in market dynamics over the past five years, as low-interest-rate debt is coming due and traditional sources of financing retreat. Bloomberg Intelligence analysts Noel Hebert and Sam Geier are joined by Arini Capital Management CIO and Founder Hamza Lemssouguer on this episode of Credit Crunch to discuss how Arini is capitalizing on structural inefficiencies in high yield credit markets. The conversation gets into the founding of the firm and their approach to running a long/short book before touching on the extension into CLOs, dispersion despite tight spreads and the impact of shifting costs of capital.
The Credit Crunch podcast is part of BI’s FICC Focus series. Listen on Apple Podcasts and Spotify.
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